Leverage can ________ a firm's expected earnings per share, but does not necessarily increase the share price.
A) decrease
B) dilute
C) increase
D) never change

Question

Quizplus · Accepted Answer

Leverage can increase a firm's expected earnings per share (EPS) by using borrowed funds or other financial instruments to increase the potential return on investment. However, it does not necessarily increase the share price because the increased potential return comes with increased risk, which can affect investor perception and market valuation.

Leverage Can ________ a Firm's Expected Earnings Per Share, but Does